Mixed Signals in Housing Data and Small-Scale Volatility in Rates

The last two weeks of December are unlike almost any time of year in terms of market movement and what we should read into it, but there were several housing-related reports that are worth considering as we head into the new year. The National Association of Homebuilders (NAHB) published its builder confidence numbers on Monday.  Overall confidence (aka “headline”) dropped for the 12th straight month to nearly the lowest level in more than a decade.  There was a small glimmer of hope in the 6-month outlook which moved higher from last month and rose above headline confidence index for the first time all year.  The more we see developments like this in the data, the more it would speak to a bottoming-out process for housing market weakness. Other housing-related data conveyed mixed signals as well.  A day later, the government’s New Residential Construction report showed a resilience in housing starts (the ground-breaking phase of construction) juxtaposed with a sharp decline in new building permits. There are many layers of complexity underlying those numbers, and there are different conclusions to be gleaned depending on perception.  In the shorter term, there’s no doubt the housing correction has been swift.  But in the bigger picture, one might consider this correction to be payback for the uncanny boom of the past 2 years.  After all, housing starts are still running well above roughly a decade of the pre-covid years.
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